A company's warehouse was destroyed by a tornado on March 15. The only information that was salvaged is as follows: Inventory, January 1: $28,000 Purchases for the period 1/1 through 3/15: $15,000 Sales for the period 1/1 through 3/15: $50,000 Sales returns for the period 1/1 through 3/15: $300 Company's gross profit ratio: 20% Using the gross profit method, the estimated cost of inventory that was destroyed is $3,515 $9,940 $35,000 O $3,240
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- Estimating Inventory Loss Using Gross Profit Method On November 15, a fire destroyed Youngstown Inc.'s warehouse where inventory is stored. It is estimated that $12,000 can be realized from sale of usable but damaged inventory. The accounting records concerning inventory reveal the following. Gross profit averaged 35% of net sales. Inventory at Nov. 1 Purchases from Nov. 1 to Nov. 15 Net sales from Nov. 1 to Nov. 15 $144,000 168,000 240,000 Required a. Calculate the estimated loss of inventory using the gross profit method. $ 144,000 b. Assume instead that the markup is 25% of cost. Estimate the loss of inventory using the gross profit method. $ 120,000 XProblems Problem 1 Gross Margin Method: Inventory Burned, Indemnity. Word Wholesale Company's warehouse burned on April 1, 20X5. The following information (up to the date of the fire) was taken from the records of the company; inventory, January 1, P30,0003; gross sales, P160,000; purchases, P90,000%3; sales returns (restored to stock), P5,000; purchase returns and allowances, P2,000; and freight-in, P8,000. The cost of goods sold and gross margin for the past three years were: Cost of Goods Sold P500,000 460,000 500,000 Gross Margin P125,000 120,000 120,000 Year 20X2 20X3 20X4 Required: 1. Estimate the cost of the inventory destroyed in the fire. 2. Under what conditions would your response to (1) above be questionable? 3. The insurance company pays indemnity on market value at the date of the fire. What amount would you recommend that Word submit as an insurance claim? Explain.The following information is available for October for Barton Company: Beginning inventory $350,000 Net purchases 1,050,000 Net sales 2,100,000 Percentage markup on cost 66.67% A fire destroyed Barton's October 31 inventory, leaving undamaged inventory with a cost of $21,000. Using the gross profit method, the estimated ending inventory destroyed by fire is
- A fire on 30 September 20X2 destroyed some of a company's inventory and its inventory records. The following information is available: $ Inventory 1 September 20X2 318,000 Sales for September 20X2 612,000 Purchases for September 20X2 412,000 Inventory in good condition at 30 September 20X2 214,000 Standard gross profit percentage on sales is 25% Based on this information, what is the value of the inventory lost? A $96,000 B $271,000 C $26,400 D $57,000Current Attempt in Progress Windsor Corporation's April 30 inventory was destroyed by fire. January 1 inventory was $154,200, and purchases for January through April totaled $525,400. Sales revenue for the same period was $687,900. Windsor's normal gross profit percentage is 30% on sales. Using the gross profit method, estimate Windsor's April 30 inventory that was destroyed by fire. Estimated ending inventory destroyed in fire $The following information is available for July for Aluminum Company. Beginning inventory Net purchases Net sales Percentage markup on cost $350,000 1,050,000 2,100,000 66.67% A fire destroyed Aluminum's July 31 inventory , leaving undamaged inventory with a cost of $21,000 . Using the gross profit method , the estimated ending inventory destroyed by fire is 539000 119000 700000 560000
- Current Attempt in Progress Bonita Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. The corporation's books disclosed the following. Beginning inventory $178,300 Sales revenue $607,900 Purchases for the year 355,000 Sales returns 21,600 Purchase returns 27,700 Rate of gross profit on net sales 30 % Merchandise with a selling price of $21,000 remained undamaged after the fire. Damaged merchandise with an original selling price of $15,500 had a net realizable value of $5,300. Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage. Amount of the loss $On 30 September 20X1 part of the inventory of a company was completely destroyed by fire. The following information is available: – Inventory at 1 September 20X1 at cost $49,800 – Purchases for September 20X1 $88,600 – Sales for September 20X1 $130,000 – Inventory at 30 September 20X1 – undamaged items $32,000 – Standard gross profit percentage on sales 30% Based on this information, what is the cost of the inventory destroyed? A $17,800 B $47,400 C $15,400 D $6,400A flood destroyed a company's warehouse contents on September 12. The following information was the only information that was salvaged: 1. Inventory, beginning: $28,200 2. Purchases for the period: $17,200 3. Sales for the period: $55,200 4. Sales returns for the period: $720 The company's average gross profit ratio is 37%. What is the estimated cost of the lost inventory using the gross profit method? Multiple Choice $11,077.60. $25,242.40. $28,602.00. $45,400.00. $44,400.00.
- The following information is available for October for Decko Company. Beginning inventory $ 50,000 Net purchases 150,000 Net sales 300,000 Percentage markup on cost 66.67% A fire destroyed Decko’s October 31 inventory, leaving undamaged inventory with a cost of $3,000. Using the gross profit method, the estimated ending inventory destroyed by fire is $GROUP ACTIVITY Case 2: Moven Company reported that the financial records were destroyed by fire at the end of the current year. However, certain statistical data related to the income statements are available. Interest Expenses P 200,000 Cost of Goods Sold Sales Discount P 3,000,000 P 300,000 The beginning inventory was P 500,000 and decreased 20% during the year. Administrative expenses are 25% of cost of goods sold but only 10% of gross sales. Distribution costs represent 70% of the operating expenses. 1. What amount should be reported as gross sales? 2. What total amount should be reported as operating expenses? 3. What amount should be reported as income before tax for the current year?On 30 September 20X1 part of the inventory of a company was completely destroyed by fire. The following information is available: – Inventory at 1 September 20X1 at cost $49,800 – Purchases for September 20X1 $88,600 – Sales for September 20X1 $130,000 – Inventory at 30 September 20X1 – undamaged items $32,000 – Standard gross profit percentage on sales 30% Based on this information, what is the cost of the inventory destroyed?